Help for capitalism to come clean
A new bill in the US is attempting to save the system from itself
New Zealand has just announced a clampdown on foreigners buying property in that country. The move comes as increasing numbers of America’s super-rich have identified the distant archipelago as their favourite location in the event of the apocalyptic collapse of capitalism. It is apparently particularly popular among the billionaires of Silicon Valley — they feel they know the country, having watched several reruns of Lord of the Rings.
For example, billionaire venture capitalist Peter Thiel — who founded Paypal with Elon Musk and backed Donald Trump’s presidential campaign — secured New Zealand citizenship in 2011 with such an apocalypse in mind. His idea is to hop on his private jet and head to his new home in New Zealand, with a few friends, when the systemic collapse becomes evident.
US senator Elizabeth Warren has launched a plan to help those who would be unable to afford this option — even if it were still available. But Warren, a potential presidential candidate for 2020, is attempting something much more ambitious than building a bolt-hole in Hobbit-land.
She wants to avoid the apocalypse by saving capitalism, which — unlike her Democratic Party ally Bernie Sanders — she believes in.
The crux of her plan is the Accountable Capitalism Act, for which she introduced a bill in the Senate this month. If enacted, it would require companies with more than $1bn in revenue to apply for a corporate charter from the federal government. To get a charter, companies would have to recognise that their duties extend beyond maximising shareholder profits, and 40% of the board would have to be elected by employees. Among the many requirements are restrictions on executives trading in their shares, and on political donations.
The bill is based on Warren’s belief that shareholder capitalism threatens the survival of capitalism.
It is an attempt to unlock the almost 50-year stranglehold of Milton Friedman’s shareholder-based perspective, which contends that corporations are only responsible to their shareholders; their only social responsibility is to increase profits.
This perspective has been baked into US company law and finance, and has spread virus-like across much of the globe. In recent decades, its power in the US has been reinforced by the efforts of well-resourced lobbyists.
In a Wall Street Journal op-ed, Warren explains the thinking behind the bill: “For the past 30 years we have put the American stamp of approval on giant corporations even as they have ignored the interests of all but a tiny slice of Americans. We should insist on a new deal.”
One political analyst says Warren’s underlying assumption is that, because they have the legal rights of persons, corporations should act like decent citizens, upholding their side of the social contract and not acting like sociopaths whose sole obligation is profitability.
If it works, the act would redistribute trillions of dollars from the super-rich to middle-class Americans. Which is why Warren is probably bracing for a vicious and well-orchestrated backlash — particularly from those who were planning to relocate to New Zealand.
Elizabeth Warren is attempting something much more ambitious than building a bolt-hole in Hobbit-land